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Community land trusts take aim at rising rents

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A collective land-ownership model could put the brakes on rising real estate costs.

Grace Town Homes, a rental development by the Community Justice Land Trust in Philadelphia.
Image courtesy Community Justice Land Trust

In 2006, neighbors in Philadelphia’s Eastern North section got a vision of the future—and it was a troubling sight.

The area, near Temple University and largely lower income and Latino, was beginning to feel the influence of nearby developments, loft-to-condo conversions that had been a harbinger of rising rents and displacement in similar neighborhoods. Eastern North residents felt they were next.

Motivated by a desire to fill the vacant lots in their neighborhood—and fears of getting priced out of their homes—residents turned to an old solution to address the new reality of rising rents: a community land trust. The trust was established under the banner of the Eastern North Philadelphia Coalition, which joined community groups, nonprofits, and community members.

In an era of both rising land values and speculation, the Community Justice Land Trust’s formation gave residents in Eastern North a way to take some control over nearby development. The basic idea behind community land trusts is bifurcated ownership: The community owns the land in perpetuity via a nonprofit, while homeowners or building owners take out extended ground leases.

“When you look at how homes appreciate over time and what markets do over time, we started to ask ourselves, ‘How do you take out the cost of land?’” says Christi Clark, the organizing director of the Women’s Community Revitalization Project, one of the groups involved in the trust.

The site of the 36-unit Grace Homes before construction, with Nora Lichtash, the Women’s Community Revitalization Project’s executive director, and Pastor Harris of Firm Hope Baptist Church, two partners in this project.

The model allows for both collective control of development and individual ownership. Homeowners get a deed for their home and an extended lease for the land, and can purchase a house at a relative discount, since the speculative value of the land is removed from the equation.

Owners can sell anytime, but the trust retains the right to purchase the home for its original selling price, plus a portion of the appreciation on the land value. This model, which some have called a “dollar that lasts” approach, discourages speculative reselling and preserves affordability for the next family.

Currently, the Community Justice Land Trust has built 36 affordable rent-to-own units on property under the auspices of this program, and there are 75 more in the pipeline, with plans to develop both homes and commercial properties.

“With the community having control of the land, and preserving affordability, that helps future generations stay in an area they call home,” Clark says.

Keeping pace with soaring rent

Clark’s group and others have begun to see community land trusts (CLTs) as vital solutions in the wake of seismic shifts in the U.S. housing market.

The country currently faces one of its worst housing affordability crises. Statistics in the annual report on rental housing from the Harvard Joint Center for Housing Studies paint a particularly grim picture: The national median asking price for a new apartment rose 27 percent between 2011 and 2016, to $1,480 a month. More than 20 million Americans renters are cost-burdened, due in large part to skyrocketing rents and relatively stagnant incomes, and while the number fell slightly last year, it’s still at uncomfortably high levels.

Over the last six years, tenants across the country have seen increases in the median rent exceed inflation for non-housing expenses by 1 percent each year. And in hot markets like Austin, Denver, and Seattle, median rents are rising twice as fast.

Homeownership has become even more of a struggle. Between 2000 and 2010, when median home costs nearly doubled, from $119,600 to $221,800, median incomes actually decreased.

In the face of these trends, many neighborhood advocates and developers have started turning to community land trusts to help entrench affordability. Nearly 250 such groups operate across the country today.

The huge run-up of prices in the 21st century, which can lead to gentrification, speculation, and predatory practices, has shrunk the affordable housing stock, says Andrew Reicher, executive director of the Urban Homesteading Assistance Board, one of the community groups collaborating on the Interboro Community Land Trust in New York City.

“People are looking around for a tool that creates affordable housing from the start, and prevents this type of change from happening again,” he says. “I’m not sure people realize how fragile our housing economy can be.”

Civil rights and the movement for collective economic empowerment

Activist Robert Swann, along with Slater King, a cousin of Martin Luther King, helped establish the community land grant concept, and launched it in 1969 with New Communities, a 5,700-acre farm and land trust in southwest Georgia collectively owned by roughly a dozen African-American families. Swann and King were inspired by previous collectivist actions, including the Garden City movement in the United Kingdom, Israeli collectives, and land-reform activists in India.

The idea of collective ownership and community control has taken root across the country: Some CLTs focus on building homes, while others, such as the Community Justice Land Trust, zero in on rentals. Groups often set up varying resale restrictions to control the flow of property sales and encourage long-term stays instead of a revolving door of residents. Most include significant community representation on their governing boards.

In San Diego, a local group has used the CLT model to encourage homeownership. The San Diego Land Trust recently bought a series of unused lots from the city, which offered them at the steeply discounted rate of $1 apiece. The San Diego Land Trust plans to construct 25 homes.

According to Jean Diaz, executive director of the trust, this new project shows the flexibility of the model. His organization is focused on providing homes for those making between 80 and 120 percent of the area’s median income. It’s a tool for middle-income housing, with a board that will be composed of one-third homeowners.

“We’re doing what we can to make a dent in the problem,” he says. “In San Diego, a lot has been done to provide low-income rental housing. There really aren’t subsidies for moderate-income ownership housing.”

Urban advocates point to the longevity of CLTs as a huge advantage. Most subsidies used for affordable housing target low-income renters, yet don’t help this population—and others with more moderate income—move up the rungs of the property ladder and achieve homeownership. In addition, many subsidies aren’t permanent. Affordable housing often reverts back to market-rate pricing after 30 to 40 years.

CLTs can be especially useful tools to help people of color and low-income workers achieve homeownership. According to data from the Grounded Solutions Network, a nationwide inclusionary housing and CLT advocacy group, since the mid ’70s, only one of every two low-income homeowners of color in the U.S. has been able to keep a home they purchase for more than five years. As it normally takes roughly 10 years of ownership to truly realize the value of buying instead of renting, many lose value instead of creating wealth. For homeowners in a CLT, however, 93 percent maintain ownership for more than five years.

Can land trusts work in expensive cities?

One of the more intriguing new CLTs, the nascent Interboro Community Land Trust, aims to apply this model to one of the nation’s most expensive real estate markets, New York City.

According to Reicher, Interboro will partner with developers and nonprofits across the city. New affordable homes, apartment developments, and co-ops will be added to the trust, which will help maintain affordability longer than standard subsidized housing developments.

While Interboro has already attracted seed funding from the city’s Department of Housing Preservation and Development, as well as a $1 million contribution from Citi Community Development, the organization will need to partner with existing projects to truly grow; even a few million won’t be enough to acquire significant land in New York. Still, despite the high costs of acquisition, Interboro believes it can grow to 250 units over the next few years.

This represents a long-term investment in stability and affordability. As Reicher says, the community land trust model can’t magically create affordability; it can really only maintain it. But at a time when rising urban land prices can seem as regular as the weather, advocates see the advantages of a long-term vision.

“This will keep housing stable and affordable in good times and bad,” he says. “People will be able to benefit from their own hard work.”